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third of the cost of building a combustion turbine power plant to 

 serve that equivalent load. 



Additionally, combustion turbine power plants would operate at 

 an efficiency of something in the 40 percent region and would bum 

 more than twice as much natural gas as comp£ired to sending that 

 gas directly to the homes for water heater service. 



The answer to your first question goes directly to the purpose 

 and the rationale of fuel switching. The direct use of natural gas 

 in homes brings to the consumer an energy cost reduction and it 

 brings to the electric industry a reduced demand on the electric 

 system, and it brings to all the users, energy users in the region, 

 a reduction in the total use of the natural gas resource. 



The second part of your questions asks do current market condi- 

 tions create a sufficient incentive for fuel switching, and, if not, 

 what measures should Bonneville undertake to encourage fiiel 

 switching. 



Under the current market conditions, it doesn't appear to be suf- 

 ficient incentive to encourage the existing electric space and water 

 heating customers to switch to natural gas. Natural gas does enjoy 

 a price advantage compared to electricity, but that, by itself, isn't 

 enough to cause energy consumers to spend the money necessary 

 to convert £in existing system fi*om electricity to natural gas gen- 

 erally. 



In fact, many of the promotional programs that are now used by 

 Bonneville and the electric utilities have exactly the opposite effect 

 and discourage, sometimes even prevent the use of natural gas for 

 space and water heating. 



So the conservation incentive programs, such as Super Good 

 Cents and the manufactured housing acquisition or MAP program, 

 have actually been used to inhibit a customer from choosing natu- 

 ral gas as a primary heating or water heating source. 



BPA has admitted in a recent report that new residential pro- 

 gram incentives, as currently designed, do adversely affect the fuel 

 choice. Bonneville cites the relatively small percentage of homes, 

 about 13 percent, that were adversely influenced by Super Good 

 Cents incentives. 



In reality, we find the number to be greater than that and I'll 

 give you an example in your own area of Eugene. One of our major 

 builders who has been building gas homes for a number of years 

 recently announced that he's going to build all electric homes in 

 1993 because of the Super Good Cents subsidy. 



He'll build over 100 homes this year and most of those homes 

 will be built in areas where natural gas is available, where, absent 

 the Super Grood Cents incentive, we believe, the builders, the buy- 

 ers coidd choose natural gas. That's just one case of dozens in the 

 region where home heating and water heating is influenced by the 

 Super Good Cents incentives. 



And it's hard for a builder or a developer to ignore as much as 

 a $2,500 per unit gift given for building an all electric Super Good 

 Cents home. Under the present Oregon building code, the addi- 

 tional cost to a builder to meet Super Grood Cents standsirds is rel- 

 atively little. 



Some of the BPA customer utilities use the Super Good Cents 

 program as a fuel choice block and prohibit the use of natural gas 



